Mutual Fund DividendsTax reports such as Form 1099-DIV (Dividends and Distributions) from mutual fund companies usually specify the amount of total ordinary dividends (including dividends, interest and short-term gains) and total long-term capital gains. Due to provisions of the Jobs and Growth Tax Relief Reconciliation Act of 2003, if a mutual fund receives qualifying dividends from a stock that it holds and passes these onto its shareholders, recipients will be able to apply new, lower tax rates to those dividends. Therefore, mutual fund companies should also report separately the dividends that qualify for the lower rates. This makes reporting capital gain amounts on the appropriate IRS Form 1040 return or Schedule D much easier. However, mutual fund tax reports do not identify wash sales! It is up to you to manually identify each one and calculate cost basis for the new shares. Yet again we see the need for an automated way to accomplish this difficult task so investors can file their taxes without wasting hours and hours of their valuable time. Return to Tax Topics Main Page
Please note: This information is provided only as a general guide and is not to be taken as official IRS instructions. Armen Computing Ltd. makes no investment recommendations and does not provide financial, tax or legal advice. Please consult your tax advisor or accountant to discuss your specific situation. You are solely responsible for your investment and tax reporting decisions, and you should carefully evaluate all information delivered to you by Armen Computing Ltd. and TradeLog. Not all information may be appropriate for all investors. |